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Is there any room in the mobile market for an Android-based handheld gaming system?

"Like the music business before it, the gaming industry is on the verge of going through a dramatic digital transformation, where emerging digital "app based gaming" is becoming the dominant method of purchasing and playing games."

That's the basic premise behind the MG, a portable Android gaming device that's basically the Ouya of portable mobile gaming. Its creators are seeking a whopping $950,000 on Kickstarter to get the device manufactured.

It's a tall order, and with 26 days left, the project still has over $900,000 left un-funded.

Unlike smartphones that do basically the same thing as the MG, the device will have neither 3G or 4G capabilities and will retail without any contract obligations. This should help keep the price down, but will also make it basically the Android equivalent of the iPod Touch.

Here are the specs:

4" WVGA (480x800) Capacitive Touch

TCC8925 Cortex A5 processor at 1GHz.

1GB RAM/4GB of internal flash storage

1880mAh battery

Android 4.0 (Ice Cream Sandwich)

WiFi 802.11 b/g/n

1.3MP front-facing camera for still image and video capture

Stereo headset jack

Micro SD card slot for expandable memory

Micro USB 2.0 HS

Gyroscope, Compass, Accelerometer sensors

So let's look at that first quotation. Gaming is on the verge of a "dramatic digital transformation" and everyone is migrating to app-based gaming.

Is this true?

I don't think so. I think we're mistaking the rise of a new market for the replacement of an older one.

But the rise of app-based mobile gaming isn't actually replacing PC and console titles; it's simply a high-growth sector due to its relative infancy and the rapid growth of mobile tech. This means it's a good bet for developers and investors, promising a high short-term return on investment. It does not mean that app-based gaming is crowding out other gaming, however.

This is what bugs me most about the MG. It leans much too heavily on the assumption that people want a device specifically to play Android-based games on. Ouya has this same basic flawed assumption. Games are a perk that comes with along with a smartphone or a tablet - one of many reasons to own this sort of gadget - not the reason most people own smartphones or tablets in the first place.

Since anyone really invested in Android-based gaming in the first place almost certainly owns either an Android-based tablet or an Android-based smartphone, it's hard for me to see a place for the MG.

For my part, I can't imagine spending money on both a smartphone and a tablet; for those consumers who do, I can't see a third device entering the picture. And while the Kickstarter page emphasizes family gaming, most families will have these or other kid-geared devices to play games with their children.

With the latest Apple/Samsung/Google patent nonsense muddying the Android waters, the investment potential of any Android-based device has come into question. Not a great time to launch this sort of Kickstarter project.